Uber, Ola drivers feel the heat of jobs as their dreams come to a screeching halt

“I may not be able to do this for long. I’ll go back to driving private cars after that. It doesn’t make sense to put health at risk for the kind of money we’re getting now.”Shailesh Menon | ET Bureau | November 17, 2016, 09:10 IST

It starts with a niggling cramp on the calf muscles just when the clutch pedal is pressed down. The cramp exacerbates as the day progresses and by noon, a burning sensation envelope the quadriceps. But there are nine more hours to go and numerous rides to finish for this city cab driver.

“I may not be able to do this for long. I’ll go back to driving private cars after that. It doesn’t make sense to put health at risk for the kind of money we’re getting now,” says Dhirendra, who drives a Maruti Dzire in Mumbai for Uber, an app-based taxi service. Dhirendra’s bitterness emanates not from the pain alone, but also his plummeting monthly earnings. He was hoping to take home Rs 1 lakh every month when he joined the Uber driver network 15 months ago.

“I used to earn Rs 50,000–60,000 every month until a year ago; now it’s just a little over Rs 30,000,” says Dhirendra, as he manoeuvred the car through thin post-noon traffic. Dhirendra is among the thousands of drivers in various Indian cities who quit their jobs as “private drivers” (with average salaries around Rs 25,000 a month) and jumped on the Ola/Uber bandwagon with big dreams.

Now, those dreams have suffered a setback due to a glut of app-based cabs on the road and the consequential drop in number of rides (per driver) during non-peak hours. Friendly rides (discounts, bonus ride et al) offered by taxi aggregators have further hurt earnings. Taxi aggregators have also slashed driver incentives by 20–25% — or made the incentive structure tougher to achieve — over the past few months.

“I take my car out only during weekends these days… It’s just not viable for me to drive on weekdays as the (car) maintenance cost shaves off a good portion of my earnings,” says Ram, who drives an Etios for Ola Cabs.

Most Ola/Uber drivers (in Mumbai) set aside Rs 1,000 for diesel and Rs 200–250 for car maintenance every day. On an average, these drivers bill Rs 1,500–1,800 every day. Their earnings upside (or profit) comes from the commission and incentives paid by taxi aggregators. A drop in commission and incentives makes the whole structure unviable for drivers.

Now drivers accuse taxi hailing apps of delaying payments. The Indian Express reported that more than 100 Uber cab drivers protested outside the taxi aggregator’s office in Gurugram (Gurgaon) on Tuesday. They protested the “injustices” allegedly meted out to them, said the report. A few weeks ago, Ola cab drivers in Gurugram staged protests against the aggregator for alleged delay in payment of incentives. Ola refused to comment for this article.

Falling EarningsAccording to consultants tracking transport services, Uber and Ola are now trying to consolidate their position in the market. Efforts are on to ramp up the number of cabs on the road, log more rides and become profitable. “The days of capital dumping are over… We’ve an aggressive pricing model now,” said a senior employee of Ola Cabs requesting anonymity.

It is difficult to pin-point the exact cost-reduction measures adopted by Ola and Uber as they follow a dynamic driver-specific tariff structure. Their payouts vary even within cities or regions where they operate. Also, most drivers are handed out customised “driving plans”, with driver-specific peak hour slots, a choice between number of rides and kilometres-driven-per-day and corresponding tariff/incentive plans. Driver rating (given by the customer), ride cancellation ratios, customer complaints et al are taken into account while fixing driver incentives — making the whole process an algorithmic mess.

ET talked to nearly a dozen Ola/Uber drivers in Mumbai to find that incentives have dropped from around Rs 6,000-6,500 per 12-peak-hour-rides to Rs 4,500–5,000 per 14-peak-hour-rides. There has been a corresponding drop (in incentives) in other peakhour drive formats as well.

Gross payments for 12 peak hour trips a day used to be around Rs 6,000–6,500 a year ago; now it is Rs 4,000– 4,500. If one were to assess the same matrix by daily collection, a driver billing Rs 2,000 a day gets just about Rs 3,500 as commission currently; this used to be as high as Rs 6,000 a year ago. Meanwhile, the service charge levied (on drivers) by both operators has shot up. (Data have been sourced from drivers as aggregators refused to share specific details).

Abdul Majeed, a partner at consulting firm PwC, says drivers will now have to settle for lesser incentives and commissions. “These were purposely kept high (in the formative years of Ola and Uber India) to attract more drivers.”

Majeed says the aggregators are now trying to reduce payouts and increase the number of rides. “More rides should make up for the lost earnings of Ola/Uber drivers.” Problem is aggregators are also simultaneously cutting fares, doling out discounts and offering bonus rides to customers. Both Ola and Uber offer ‘easy rides’ at discounted fares during non-peak hours. Such rides do not make money for drivers — except of course, the lump-sum commission paid by the aggregators.

At times, the cost incurred by drivers fulfilling ‘easy rides’ could be more than the commission they earn from the aggregator. “It’s quite sad when you’ve to drive 25 kms for Rs 180,” says Arif M, an Uber driver. A few drivers are also upset with the carpooling/sharing option offered by the aggregators.

Ola offers this facility in over a dozen cities while Uber runs shared services in five cities. Often such rides result in a loss for the driver – especially during the peak hours. Another factor that is pinching drivers is the oversupply of Ola/Uber cabs — especially in cities like Mumbai, Delhi and Bengaluru. Data collated by Bengaluru-based Red Seer Consulting say Indians log nearly 2 million “online rides” (website and app bookings) every day; of this, over 90% hail an Ola or Uber cab.

“These days we get rides only during peak hours,” says Murtuza, an Uber driver. According to analysts, most drivers still get 10–12 rides every day. But they make “good money” only when they complete more peakhour trips. Off-peak hour trips are mostly discounted.

“Average fares have also fallen over the past one year,” says Dhananjay Sharma of Redseer Consulting.

Transport analysts expect driver earnings to moderate at Rs 35,000– 40,000 levels in the near term. “The aggregators are now trying to make the business sustainable for all – the customers, drivers and the aggregators themselves,” says Majeed of PwC.

Taxi aggregators have devised several plans to ensure “driver stickiness” on the platform. Ola’s car leasing and car loan options have helped the firm to enlist more drivers. Uber claims to offer more time-flexibility to their drivers.

Retaining Drivers“We offer drivers the freedom to run their own business. They drive when they want and where they want, for however long they want. We’re always looking for more ways for drivers to earn more money,” contests an Uber spokesperson.

But most drivers wince when taxi aggregators tell them to accept rides “for however long they want...”. That’s where the root of their problems lies. Ola/Uber drivers have to put in 14–16 hours a day (with a good mix of peak hour and non-peak hour rides) to earn a decent sum of money every month.

“We’re always goaded to be online and take up more trips… this is irrespective of what time we log in every day,” says Ramesh, an Uber driver. “Ola/Uber will never tell drivers to stop.”

Ola/Uber drivers cover a distance of 150– 200 kms every weekday, in order to meet their ride targets and maximise earnings. The long rides are taking a toll on their health. “Many cab drivers come to us with heart, vision and orthopaedic complaints,” says Dr Jayashri Kale, professor & head of the Mumbai-based KEM Occupational Therapy Department.

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In 2018, automobile demand remained robust despite the slowdown overcast in the last three months of year. All segments reported strong double-digit growth in the calendar year ending December 31 except passenger vehicles which reported a growth of 5 per cent. Three-wheelers sales grew fastest followed by commercial vehicles, two-wheelers, and passenger vehicles. The overall automobile sales crossed 26.7 million units for the first time.

In 2018, automobile demand remained robust despite the slowdown overcast in the last three months of year. All segments reported strong double-digit growth in the calendar year ending December 31 except passenger vehicles which reported a growth of 5 per cent. Three-wheelers sales grew fastest followed by commercial vehicles, two-wheelers, and passenger vehicles. The overall automobile sales crossed 26.7 million units for the first time.